Digital Innovation at Toyota Motors North America

Submitted by : Group 5
Abhishek Dixit (VLMP 11/01)
Gourav Garg (VLMP 11/12)
Ishan Sharma (VLMP 11/14)
Rajat Gupta (VLMP 11/30)
 Toyota Motors Corporation Outlook

Toyota is largest automotive manufacturer

Toyota Motor Corporation is headquartered in Toyota City, Aichi

Toyota has annual sales of 397.05 billion yen

Produces ~5.5 million vehicles per year

From 56 manufacturing plants across

6 continents

Employs 317,716 people

Toyota has become the largest vehicle manufacturer in Japan with over 40% market share
 Toyota Journey Before 2012

2011 tsunami
Toyota Motors 2008 World largest impacted
Sales Founded Auto Manufacture production
1957 and Recession

1970 Best Warranty claims 2012 Focus towards

selling Imported in 2009 led to Digital Innovation
Auto Maker of First Operating
US Loss in 70 Years
 Competitive Challenges

Financial crisis
of 2008
Toyota suffered a series of setbacks 2009 -2011
Recall
Toyotas global operations affected crisis of
2009

Toyota reported first ever operating loss in 70 years

Tsunami in
2011
 Competitive Challenges
25000
22661

20000 18964

15000 14045

10000
5632 Operating
5000 4327 Income $
1586
0
2007 2008 2009 2010 2011 2012 2013
-5000
-4693

-10000

First time loss reported in 2009 after 70 years

 Recognizing demands of digital economy

2009 Recall crisis revealed limitations of incremental improvements on

outdated systems

Crisis exposed need for an upgradation of core platform

No. of warranty claims calls increased from 3000 to 60000 a day

We are really good at kaizen, and kaizen means small incremental improvements. If you
are talking about a big shock to the system, we arent good at that.
Zack
Hicks, CIO

Warranty crisis istigated need for digitalization

 Evolution of Toyota ICT IS division

Centralized TMS Information System

Div 1 Div 2

Order Taker

TMS IS
Division
Business Division in Silo Cost Center

Only to address immediate need Div 3

We had almost thirty different copies of customer data in our enterprise. We even had
vendors selling the same data to multiple business units
Jayadev Gopinath
National Manager, EAID

IS used to be a cost center for departments working in silo

 Toyota Position at EICTA 3D Space before 2012

Before 2012 3RD

1. Centralized IS
2. Dept. working in
Silos
3. Scope 1 2ND

1ST

CENTRALIZED HYBRID DECENTRALIZED

MM2 CONTROL

MM3

MM1

MM0
 IS division Revamp strategy

TMS IS

Divisional IS Structure

Enhancement of Increased external

enterprise partnership for IT Adoption of cloud
architecture as a delivery and technologies
discipline maintenance

4 step approach of IS division to meet Toyotas increasing digitalization

 IS divisional structure Revamp

CIO

Automotive
Systems (DIO)

Customer,
Business Support Dealer, Field and
Associates, Parts
System (DIO) Affiliates (DIO)
and Services (DIO)

Each vertical to provide standardized tools, processes and controls

 Emergence of IS as a strategic partner

Enterprise Architecture, Integration, and Data (EAID) - 2010

To establish technology standard

More Structured enterprise-wide technology framework

Creating standard if there is no standard

Architecture review board (ARB)

To guide and review compliance with enterprise standard

Creating guidelines for project development

Facilitate reusability by building shareable technology platforms

Standardized & shared platform enforced by ARB made organization lean and agile
 Delivering value through outsourcing

Application Product Supplier

Complete suit of enterprize software Oracle/ People soft ERP Oracle

Database for ERP Oracle 9i Oracle

Vusiness intelligence SAS Business intelligence SAS

Application integration Tibco Business works Tibco software

Plant monitoring system Activplant performance management system Activplant

Plant scheduling system Assembly line control system Toyota proprietary

Service oriented architecture web logic BEA systems

Dealer daily vehicle ordering Windows internet server Microsoft

Dealer daily database SQL server 2000 Enterprise edition Microsoft

Reduced IT cost, quick deployment and SaaS solution provided by firm with core competencies
 EAID R&D function: center of exellence
Application of Endeca: Advanced data analytics approach to solve the CAMRY unintended accelaration problem warranty
claims debacle

Website Data
Vehicle Data warehouse and Production quality Application
Safety: NHTSA
Product Sales: Customer, Date ,Dealer Sale Price National Highway Transport Safety Authority
Warranty Claims: Customer, Date ,Dealer Claim cost,
Labor Cost, Part Cost

Machine Data
Why warranty claims increased by 40%?
What are owners saying
Vehicle diagnosis data
What are industry experts saying
About about the safety agencies Data received from on board chip, which gives insight
Toyotas Quality revolution takes a hit into mechanics at time of accident

Supplier Data :
Part Attributes and sourcing Info Social Media: Consumer comments and sentiments
Dimensions, stress limits,
specs, JIS, TES, Illustration
Owned Toyota all my life, suddenly accelerated on Highway
I need to rethink my choice

Qualitative & quantitative analysis of unstructured data from disparate source rendered
within 12 Weeks down from normal 12 -14 Months, saving 30% on warranty claims
 Enabling Change in Toyotas process

Customer
Digital
database channels

Established
Process
Seamless customer
CPD experience

Physical
Dealerships
Digital
Innovation EAID
platform
 Telematics is connected vehicle platform, enabling
IoT vehicles to constantly communicate with internet

Social Used Endeca capability to identify social media profiles

Mobile Not Used

Applications tracking customer driving pattern and traffic

Analytics data, this allowed Toyota to map routes that avoid traffic.

TMS migrated email and collaboration services to

Cloud Microsoft cloud services
 ISMAC effect on TOYOTA

Use case 1: Defect analysis

Reason for defect impacting vehicle quality

Use case 2: Warranty vs Alignment

Warranty claims compared to alignment data vs dealer claim
investigation

Use case 3: Change point mgmt

Corelation between mfg change points and quality defects

Use case 4: TM Skill Gap

Correlation between Mfg Defects & Team Member capability
Data Records

Use case 4: Toyota R&D Data Analytics

R&D horizontal deployment (Sahistibushi & mizenbushi)
Process flow

IS capabilities leveraging concrete and responsive approach to problem solving

 Toyota DFM Framework

Business specialization and enablement

Manufacturing
R&D & Mfg Site Toyota Technical
and Engineering Demand & Supply After Sales Dealer & Field
services Center
Business Systems

EICTA
Information Security: Security, Risk Management, Compliance

IT Management: Financial Management, Human resource, Innovation, governance

Enterprise service: End user, customer portal delivery(CPD), dealership, service management

Infrastructure service: Cloud, operations, infrastructure

Comprehensive structure with a vast scope

Toyota Position at EICTA 3D Space After 2012

3RD

In 2016
2ND
1. Empowered Teams
2. IT Infra for Customers
3. Same Process and
Platform
1ST

CENTRALIZED HYBRID DECENTRALIZED

MM2 CONTROL

MM3

MM1

MM0
 Toyota Transition at EICTA 3D Space
Restructured IS into
3RD
4 verticals
In 2016
2ND
1. Empowered Teams

EAID - discipline 2. IT Infra for Customers

3. Same Process and
Platform
1ST

CPD enabled
CENTRALIZED HYBRID DECENTRALIZED
seamless customer MM2 CONTROL

experience MM3

MM1

MM0
 Digital Innovation as part of Toyotas DNA

Cultural change
Increase awareness and excitement around innovation through TMS

Innovation fair, Toyota technology day

Innovative council: Avoid discouragement through early rejections

The Garage: 30 Hrs development for new ideas

Kickstarter Application: Online Ideas posting and feedback

Impact
Better engagement of associates

Generated enthusiasm for emerging innovative technologies

Brought together associates and suppliers to develop ideas that could be awarded seed funding

Innovation primarily targeted enhanced customer experience

 Toyota Innovation initiative: Impact
They started doing other things that were that were so innovative I thought: Why is it taking this recall crisis for all this
amazing cool stuff to emerge? Then after the problem went away the innovation went away, because people went back to
their day jobs. That is when I thought How to tap this innovation without a crisis
Zack Hicks
CIO, TMNA

Toyota Innovation Fair

Winning Innovation to get assured funding

For those idea that werent funded

iCouncil funding from CIO pool

The Garage to circumvent typical funding process
Kickstarter individuals could post ideas for feedback

IT initiatives helped corporate data match social media, thereby developing

expertise in analytics and enhancing ability to understand customer
 EICTA Implementation Strategy Comparison

Activity

Business Category Product Service

The 3 Joys(Creating, Selling, Buying)

Transformed Business strategy Rapid Business Transformation
Customer Satisfaction Customer Delight

Desired EICTA Core competency Flexibility and Agility

Single integrated ERP

Individual SaaS (Shift from Single ERP)
EICTA Policy
Outsourcing whenever possible
Mergers and acquisitions

Outsourcing enabled Toyota to choose firms with core competencies for different services

Completely opposite strategy conforming to same EICTA attributes

EICTA 3D Framework Comparison: Toyota vs IBM

3RD

TOYOTA
2ND

IBM

1ST

CENTRALIZED HYBRID DECENTRALIZED

MM2 CONTROL

MM3

MM1

MM0
THANK YOU!!